2017 GROWTH STRATEGY. Australia

Transcription

1 2017 GROWTH STRATEGY Australia

2 2017 Hamburg Growth Strategy Table of Contents A. Economic Objective and Context... 2 B. Implementation of Past Growth Strategies... 3 C. Major New Policy Actions Supporting Growth - Hamburg Summit... 4 C1. Macroeconomic Policies... 4 C2. Structural Reform and Other Actions to Foster Strong, Sustainable, Balanced, and Inclusive Growth... 5 Annexes... 7 Annex 1. Key Economic Indicators... 7 Annex 2. Implementation of Past Growth Strategies Hangzhou, Antalya and Brisbane commitments... 8 Key Commitments... 8 Key Commitments for Monitoring Purposes... 8 Non-key Commitments Annex 3. Major New Policy Actions Supporting Growth Hamburg Summit Annex 4. Past commitments St. Petersburg fiscal commitment Page 1

3 A. Economic Objective and Context Australia s transition towards broader-based growth is now well-advanced. The Australian Government aims to facilitate a smooth transition and ensure all Australians have the opportunity to enjoy the benefits of a prosperous economy. Australia s economic performance continues to compare favourably with most advanced economies, including other major commodity exporters. Australia is in its 26 th consecutive year of economic growth. In , growth is expected to rebound to 2¾ per cent after slowing in as a result of weather-related factors. The lift in economic growth is expected to occur as the drag from falling mining investment diminishes, growth in household consumption improves and exports continue to grow strongly. Non-mining business investment is also forecast to strengthen. Accommodative monetary policy, a lower exchange rate and a flexible labour market are all helping to facilitate the economic adjustment that has been underway for some time following the peak of the investment phase of the mining boom. Over recent years, a slowing in wage and price growth and a significant decline in commodity prices has constrained income growth across the economy. This is affecting households and businesses as well as having a large impact on government revenue. Wages growth is expected to improve as domestic demand strengthens but the outlook for wage growth remains subdued in the near term, reflecting spare capacity in the labour market. The near-term outlook for inflation is also subdued. The outlook for commodity prices is a key uncertainty for nominal GDP. There are also risks to the real economy around the momentum in household consumption which is dependent on the outlook for wages and the labour market, as well as uncertainty around the timing and pace of the recovery in non-mining business investment. Globally, there is heightened policy uncertainty as reforms needed to strengthen productivity have proved difficult to achieve and there appears to be growing support in some countries for protectionist policies. This could derail the recent momentum in the global economy, which would affect Australia s growth prospects. Sustaining growth in national income over the longer term will involve additional challenges. As the 2015 Intergenerational Report noted, Australia s ageing population is likely to put downward pressure on the participation rate. Accordingly, pressure on Government finances from spending on health and pensions is forecast to increase significantly, while a smaller proportion of the population will be of working age. Productivity has consistently been the most significant driver of income growth and, given the challenges ahead, will need to play an increased role as a driver of growth into the future. While productivity growth averaged 1.7 per cent over the five years to , which is broadly in line with 1 All references throughout the growth strategy that include two years (e.g ) refer to the Australian financial year which is from 1 July to 30 June (i.e. 1 July 2017 to 30 June 2018 for ); other references to years are calendar years. Page 2

4 the 30 year average of 1.6 per cent, future policy and reform efforts will be critical to achieving income growth and improving living standards. B. Implementation of Past Growth Strategies The Government is making good progress on the implementation of key commitments from the Brisbane, Antalya and Hangzhou growth strategies. The Government is supporting growth, higher wages and jobs through the Ten Year Enterprise Tax Plan, by lowering the corporate tax rate for companies over time to a more internationally competitive level. Several components, including lowering the company tax rate for businesses with a turnover less than A$50 million to 25 per cent by , and the increase in the small business turnover threshold from $2 million to $10 million per annum have now been legislated. Building on this achievement, the Government is extending the $20,000 instant asset write-off for a further 12 months to 30 June 2018 for businesses with annual turnover less than $10 million, improving their cash flow and helping them to reinvest in their business and replace or upgrade their assets. The Government intends to extend the company tax cut to all companies and has introduced legislation to do so. Australia continues to support innovation by encouraging entrepreneurial and innovative activity by implementing the National Innovation and Science Agenda (NISA). The broad suite of measures help to facilitate business operations and collaboration between industry, researchers and government; improve access to investment and capital; as well as make it easier for Australian businesses to succeed internationally. The Government has also implemented the Youth Employment Package, which helps young people by giving them the skills that employers want, opportunities for work experience and support for the move from welfare to work. The package includes a flexible, three stage Youth Jobs PaTH (Prepare-Trial-Hire) program and measures to encourage entrepreneurship and self-employment. The Government continues to improve Australia s competition framework and will provide up to $300 million to the States and Territories to remove unnecessary regulatory restrictions on small businesses and competition. Other measures, including the entry into force of free trade agreements with China, Japan and South Korea and the establishment of the Northern Australia Infrastructure Facility have already been implemented. Full details on the implementation of Australia s Brisbane, Antalya and Hangzhou commitments can be found in Annex 2. Page 3

5 C. Major New Policy Actions Supporting Growth - Hamburg Summit C1. Macroeconomic Policies Fiscal Policy The Australian Government remains committed to its strategy of returning the budget to balance by maintaining strong fiscal discipline, strengthening the balance sheet and redirecting government spending to boost productivity and workforce participation. The Budget charts a fair and responsible pathway to balance. The Government remains committed to budget repair with an improving fiscal trajectory over the forward estimates, building to a projected return to surplus in The underlying cash balance is expected to improve from a deficit of 1.6 per cent of GDP in to a projected surplus of 0.4 per cent of GDP in The Government is continuing to keep a tight rein on expenditure which will create space to lower the tax burden over time and underpins the strength of the balance sheet. A strong balance sheet provides the Government with the flexibility to continue to respond to unanticipated events during economic shocks and continue investing in building Australia. Net debt is low by global standards and expected to peak as a share of GDP at 19.8 per cent in before declining thereafter. From , debt will not be required to fund recurrent spending for the first time since the global financial crisis. Monetary Policy Australia s monetary policy stance remains accommodative, with the policy rate remaining at 1.5 per cent since August In deciding to maintain the policy rate at its current level, the Board of the Reserve Bank of Australia (RBA) has taken into account the outlook for inflation, while also paying close attention to trends in the housing market and household borrowing, and related financial stability considerations. Risks related to the housing market and household balance sheets have increased, with prices rising briskly in some housing markets and growth in household borrowing continuing to outpace growth in household income. Indicators of household financial stress remain contained and recent supervisory measures should help to address the risks associated with high and rising levels of household indebtedness by reinforcing prudent lending standards. Monetary policy will continue to be set to keep inflation between 2 and 3 per cent, on average, over time. The inflation target is the most appropriate framework for achieving price stability and its medium-term focus provides sufficient flexibility for the Bank to achieve its broader objectives, including financial stability. Page 4

6 C2. Structural Reform and Other Actions to Foster Strong, Sustainable, Balanced, and Inclusive Growth Australia is undertaking a range of new structural reform measures announced since the Hangzhou Summit. The Government is focused on growing the economy to secure more and better paying jobs through a significant investment in infrastructure, including in regional areas, reforming the way schools are funded, improving jobs and skills training, reducing pressure on housing affordability, maintaining the reliability, affordability and sustainability of Australia s energy system and establishing Australia as a leading global financial technology (FinTech) hub. These reform commitments are also consistent with and support G20 goals to strengthen growth, enhance resilience and promote inclusive growth. National Infrastructure Plan Building Australia Expanding on previous commitments, the Government is committing over $70 billion from to for transport infrastructure across Australia, using a combination of grant funding, loans and equity investments. It is also establishing a 10-year allocation for funding road and rail investments, recognising that many transformational projects are planned and built over many years. Well-selected infrastructure investment improves long-run productivity, increasing and spreading Australia s economic growth and delivering higher incomes for Australians. Quality Schools The Government is investing in primary and secondary education through Quality Schools, which delivers an additional $23.4 billion in recurrent funding for schools over the decade to 2027 and implements a new needs-based funding model for schools which delivers a consistent Commonwealth approach for all schools in all States and Territories. The Skilling Australians Fund The Australian Government is focusing on jobs and skills training through the Skilling Australians Fund. Through the Fund, the Government will provide an estimated $1.5 billion over four years from to support the training of Australians. Spending from the Fund will be prioritised towards apprenticeships and traineeships, and when matched with State and Territory funding, will support up to 300,000 apprentices, trainees, pre-apprentices and higher level skilled Australians. Growing Regional Communities Building growth in Australia s regions remains a key focus of the Government, ensuring the benefits of economic growth are shared across the country. The Government will provide $770 million over 4 years from for regional infrastructure projects. In addition, the Government has committed a further $220 million over four years for the Regional Jobs and Investment Package, which will support regional communities to diversify their economies, stimulate long-term growth and deliver sustainable employment. Page 5

7 Housing Affordability Measures The Government is reducing pressure on housing affordability by supporting home ownership, introducing new measures to unlock supply and boosting investment in affordable housing. The various measures will be implemented over the next 12 months. Energy Reliability and Affordability The Government s energy security plan will ensure that Australia has reliable, affordable and sustainable energy for businesses and households. The plan includes measures that: invest in new generation, transmission and storage capacity; invest in new low emissions technology; and secure the domestic supply of gas. Financial Technology (Fintech) The Government is committed to establishing Australia as a leading global financial technology (FinTech) hub, including through opening up crowd-sourced equity funding for start-ups and innovative public companies, and introducing an enhanced regulatory sandbox, to enable new and innovative FinTech products and services to be tested in Australia. The package will help drive future productivity growth by encouraging individuals and businesses to innovate through greater collaboration, building talent and skills, supporting entrepreneurship and improving access to capital. Full details on Australia s policy actions since the Hangzhou Summit can be found in Annex 3. Page 6

8 Annexes Annex 1. Key Economic Indicators Key Indicators** (outcomes) I. Macroeconomic Indicators Real GDP (% yoy) ¾ 2 ¾ Nominal GDP (% yoy) ½ 4 ¾ Inflation (%, through-the-year growth to the June quarter) Underlying cash balance (% of GDP)* Unemployment (%, rate for the June quarter) ¼ 2 ½ 2 ½ ¾ 5 ¾ 5 ½ 5 ½ 5 ¼ Current Account Balance (% of GDP) ½ -1 ½ -2 *A positive (negative) balance indicates a fiscal surplus (deficit). ** Indicators can be presented on a fiscal year basis, should they be unavailable for the calendar year. Page 7

9 Annex 2. Implementation of Past Growth Strategies Hangzhou, Antalya and Brisbane commitments Key Commitments List of key commitments already fully implemented at the time of Hangzhou Summit 1. The Korea-Australia Free Trade Agreement (Brisbane) 2. The Japan-Australia Economic Partnership Agreement (Brisbane) 3. Creating self-reliant industries through various funds amounting to $1.1 billion (Brisbane) 4. Strengthening participation incentives through active labour market policies, including education and training reforms (Brisbane) 5. The Growing Jobs and Small Business package (Antalya) 6. The China-Australia Free Trade Agreement (Antalya) 7. Establishing the Northern Australia Infrastructure Facility (Antalya) 8. Opening the Australian Trusted Trader programme (Hangzhou) Key Commitments for Monitoring Purposes Hangzhou Key Commitments * Denotes that this measure has been selected as one of three key commitments from the Hangzhou growth strategy. Ten Year Enterprise Tax Plan * The Government s Ten Year Enterprise Tax Plan will support growth and higher wages by lowering the tax rate for companies over time. Inclusion of the commitment in growth strategies This measure was included in the Hangzhou growth strategy. Detailed implementation path and status Interim Steps (include deadlines) for Implementation Under the Ten Year Enterprise Tax Plan: From 1 July 2016, incorporated businesses with annual turnover less than $10 million have had a company tax rate of 27.5 per cent. The turnover threshold to qualify for the lower tax rate will be raised to $25 million in the financial year and $50 million in This lower rate will be extended gradually to Page 8 Status Legislation has been enacted for the tax cuts for businesses with a turnover less than $50 million (AUD), the increase in the small business turnover threshold to $10 million per annum, the increase in the threshold for the

10 all companies by The company tax rate will then be reduced to 27 per cent in , 26 per cent in and finally 25 per cent in The company tax cuts, to companies of all sizes, are estimated to cost $2.7 billion in revenue to The small business entity turnover threshold has been increased from $2 million to $10 million. This change means around 90,000 businesses have access to a range of small business tax concessions. It is estimated to cost $2.2 billion in revenue to The small business unincorporated tax discount was increased from 5 to 8 per cent from 1 July 2016, capped at $1,000, for unincorporated businesses with annual turnover less than $2 million and extended to businesses with turnover less than $5 million. The tax discount will further increase to 10 per cent from 1 July 2024, 13 per cent from 1 July 2025, and reach a new permanent discount of 16 per cent from 1 July 2026, alongside cuts in the company tax rate. This is estimated to cost $450 million in revenue to Owners of around 2.3 million small unincorporated businesses may be eligible for the expanded tax discount. unincorporated tax discount to $5 million per annum and the increase in the rates of the unincorporated tax discount. The Government has introduced legislation into Parliament to deliver the remainder of the tax cuts. Legislation to extend the $20,000 instant asset write-off to 30 June 2018 received Royal Assent on 22 June The 32.5 per cent personal income tax threshold was increased from $80,000 to $87,000 from 1 July This is estimated to cost around $4 billion in revenue to In addition, the Government is continuing to support small businesses by extending the $20,000 instant asset write-off for a further 12 months to 30 June The concession is available to businesses with aggregated annual turnover less than $10 million (five times higher than the previous turnover threshold). Page 9

11 Providing support for business, with an initial emphasis on small business, aims to encourage investment, enhance productivity, increase the level of economic activity and over time, increase real wages and living standards. Impact of Measure This plan will support higher wages by lowering the tax rate for companies over time to an internationally competitive level. The Ten Year Enterprise Tax Plan is expected to permanently increase the size of the economy by just over 1 per cent in the long term. The extension of the $20,000 instant asset write-off will improve cash flow for small businesses, providing a boost to small business activity and investment for another year. National Innovation and Science Agenda * The Government has committed $1.1 billion to a National Innovation and Science Agenda. Inclusion of the commitment in growth strategies This measure was included in the Hangzhou growth strategy. Detailed implementation path and status Interim Steps (include deadlines) for Implementation On 7 December 2015, the Australian Government released the National Innovation and Science Agenda (NISA). The Government has committed $1.1 billion over four years from to to support innovation by investing in enablers such as education, science and research, incentivising business investment and removing regulatory obstacles. NISA supports innovation by encouraging entrepreneurial and innovative activity. This includes facilitating business operations and collaboration between industry, researchers and government; improving access to investment and capital; as well as making it easier for Australian businesses to succeed internationally. The Agenda also supports science by prioritising education and research. This includes fostering scientific research and preparing it for Page 10 Status Significant progress is being made in implementing NISA. A range of initiatives to encourage innovation have been implemented, including a new crowd source equity funding framework, tax incentives for start-ups and venture capital, reforms to employee share schemes, investment in critical research infrastructure and funding to encourage more women to

12 commercialisation; prioritising science, technology, engineering and mathematics education; as well as making government data more accessible. The Agenda contains 24 measures with varying start dates. Detailed information on each measure is available at: undertake careers in science, technology, engineering and mathematics. In the Budget, the Government announced it will invest in critical infrastructure for optical astronomy. The Government has also commissioned a 2030 Strategic Plan as well as a Research Infrastructure Investment Plan to guide future investment in innovation, science and research. Impact of Measure NISA will enhance the competitiveness of Australian firms, enabling them to capture increased market share, create new jobs and boost growth. Youth Employment Package * The Government has introduced a Youth Employment Package. Inclusion of the commitment in growth strategies This measure was included in the Hangzhou growth strategy. Detailed implementation path and status Interim Steps (include deadlines) for Implementation The measures comprising the Youth Employment Package were implemented between December 2016 and April The Youth Jobs PaTH comprises three stages that may be undertaken flexibly by job seekers under 25 years of age who are in employment services: Status The Youth Jobs PaTH program fully commenced in April Employability skills training (Prepare) training Page 11

13 for up to six weeks to develop basic employability skills. Internship placement (Trial) financial assistance for up to 30,000 voluntary internship placements of four to twelve weeks are available each year to enable businesses and job seekers to trial their employment fit. Youth Bonus wage subsidy (Hire) increased and streamlined wage subsidies are available to employers (through direct employment or labour hire arrangements) if they hire a young job seeker who has been in employment services for six months or more. Impact of Measure The Youth Employment Package will help young people become more competitive in the labour market, thereby lifting labour force participation and boosting growth over time. Competition Policy Review Response The Government is improving the Australian competition framework by amending competition legislation, removing unnecessary Commonwealth restrictions on competition and rewarding States and Territories (States) that remove their unnecessary restrictions on competition. Inclusion of the commitment in growth strategies This measure was included in the Hangzhou growth strategy. Detailed implementation path and status Interim Steps (include deadlines) for Implementation The Government is amending a number of key provisions of the Competition and Consumer Act 2010 to simplify the law and better target anti-competitive conduct whilst supporting pro-competitive behaviour. The Government supported the majority of the recommendations of the Harper Review. The Government is undertaking further consultation and policy development in relation to the remaining recommendations. Page 12 Status Legislation was introduced into Parliament in December 2016 and March 2017 and is awaiting Parliamentary approval. The Australian Competition and Consumer

14 For example, following public consultation, the Government adopted in full the Harper Review recommendation that section 46, relating to the unilateral misuse of market power, be replaced by a new provision which is better able to deal with harm to competition in Australian markets. The Commonwealth continues to review and remove unnecessary restrictions on competition. The Government has also undertaken actions consistent with the Harper Review including developing a response to a Productivity Commission review of intellectual property laws. In December 2016, the Australian Government and the States agreed to an Intergovernmental Agreement on Competition and Productivityenhancing Reforms that will help improve Australia s economic and productivity performance. The Government is now working with the States on finalising a National Partnership on Regulatory Reform (NPRR) under which it will pay $300 million to States that remove unnecessary restrictions on competition and small business. The States impose a wide range of regulations that unnecessarily prevent businesses from growing and creating jobs. These regulations impede innovation and entrepreneurship. They can also restrict small businesses ability to compete with foreign competitors, reducing the products and services they can provide or limiting where and when their businesses can operate. Commission has released draft guidance on its proposed approach to implementation, which will be finalised prior to the commencement of the new law. The Commonwealth will work with States on bilateral agreements with the Commonwealth that outline what specific regulatory reforms they will pursue in and , relevant milestones and how much they will be paid. Impact of Measure These competition reforms are an important step to ensure Australia has the best possible competition framework to support innovation and boost economic growth and jobs. Improving the law s clarity, effectiveness and force will improve choice for consumers, and support innovation by new businesses. Previous National Competition Policy Reforms delivered in response to the independent Hilmer Review boosted GDP by 2.5 per cent and the Harper Review is expected to also have a positive impact on Australia s economy. Page 13

15 Boost water infrastructure investment through the National Water Infrastructure Loan Facility The Government will provide $2 billion in concessional loan funding to the States and Territories to co-fund the construction of water infrastructure projects. Inclusion of the commitment in growth strategies This measure was included in the Hangzhou growth strategy. Detailed implementation path and status Interim Steps (include deadlines) for Implementation After being announced in the Budget, this measure is in the process of being implemented. Concessional loan funding will take place over a 10-year period. This funding is for construction of major water infrastructure that has a total construction cost of more than $100 million. A minimum amount that the Commonwealth will provide as a concessional loan is $50 million. The maximum period of a loan may be up to 15 years. Loans may be structured to provide an interest only repayment period of up to five years with a further period of ten years to fully repay the loan principal and interest. Status The National Water Infrastructure Loan Facility has been established. The first round of expressions of interest has been concluded and the second round is open. Applicants are currently being assessed as to the suitability of this concessional loan. Impact of Measure The National Water Infrastructure Loan Facility will provide state and territory governments with concessional loans to co-fund the construction of water infrastructure projects. The $2 billion of concessional loan funding will help accelerate the construction of water infrastructure projects such as dams, weirs, pipelines and managed aquifer recharge projects. Information Technology Agreement The Government has concluded negotiations of the expanded Information Technology Agreement. Inclusion of the commitment in This measure was included in the Hangzhou growth strategy. Page 14

16 growth strategies Interim Steps (include deadlines) for Implementation Status Detailed implementation path and status Impact of Measure In December 2015, Australia, together with 53 other World Trade Organization (WTO) Members, concluded the expansion of the Information Technology Agreement (ITA). Participants agreed to eliminate tariffs on 201 products valued at over A$1.3 trillion per year, accounting for around 10 per cent of total global trade. Most participants began implementation of the commitments on 1 July 2016, with the majority of tariffs phased-out over three years to Australia s implementing legislation came into effect in December 2016 and the first tariff cuts took place on 1 January The next round of tariff cuts occurred from 1 July 2017 and the third will occur from 1 July The expansion of the ITA has committed participants to eliminate tariffs on 201 IT products including retail and consumer electronics, telecommunications, advanced medical equipment and IT hardware. WTO estimates show that this accounts for approximately 10 per cent of global trade, more than $18.9 billion of Australian imports, and around $3.6 billion of Australian exports. Eliminating tariffs on these goods will benefit consumers and businesses by putting downward pressure on prices. This will create jobs and help boost global GDP growth. Trans-Pacific Partnership The Government has signed the Trans-Pacific Partnership. Inclusion of the commitment in growth strategies This measure was included in the Hangzhou growth strategy. Detailed implementation path and status Interim Steps (include deadlines) for Implementation The Trans-Pacific Partnership Agreement (TPP) negotiations concluded on 5 October The TPP was signed on 4 February 2016 by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Page 15 Status On 30 January 2017, the US informed other TPP signatories that it did not intend to

17 Impact of Measure Zealand, Singapore, the United States and Vietnam. These countries represent around 40 per cent of the global economy and a quarter of world trade. The TPP will enter into force 60 days after all original 12 signatories have ratified it. If this has not occurred by 4 February 2018, the Agreement will enter into force 60 days after at least six original signatories accounting for 85 per cent of the combined gross domestic product of the original signatories have ratified the TPP. become a party to the TPP. Australia and other TPP parties are looking at alternative arrangements to realise the benefits of the TPP. In May 2017 TPP signatory countries agreed to assess options for bringing the TPP into force as soon as possible. The TPP is a regional free trade agreement of unprecedented scope and ambition. Economic modelling indicates the TPP will provide a permanent increase in Australian GDP of 0.7 per cent by The TPP includes Peru, Mexico and Canada, with whom Australia does not currently have a trade agreement. Antalya Key Commitments The Jobs for Families Child Care Package The Government has committed to a Jobs for Families Child Care Package. Inclusion of the commitment in growth strategies This measure was included in the Antalya Growth Strategy. Detailed implementation path and status Interim Steps (include deadlines) for Implementation The Australian Government will provide more than $2.5 billion to support the implementation of the Jobs for Families Child Care Package. The Package will provide greater choice for around 1 million families through simpler, more affordable, more flexible and accessible child care. With this additional investment, the Australian Government will spend around $37 billion on child care support over the next four years. Page 16 Status The Jobs for Families Child Care Package was legislated in March The Child Care Subsidy will commence in July The Child Care Safety Net has been progressively rolled

18 The Package will: out since July replace the current Child Care Benefit, Child Care Rebate and Jobs, Education and Training Child Care Fee Assistance programmes; introduce a single means-tested Child Care Subsidy for families (subject to a new activity test) paid directly to approved care service providers; and include a new Child Care Safety Net to provide additional support to genuinely vulnerable and disadvantaged families through three new programmes. Impact of Measure The Jobs for Families Child Care Package focuses on making child care simpler, more affordable, accessible and flexible, to support workforce participation and a stronger economy. Brisbane Key Commitments Improve competition by reducing regulatory and administrative burdens The Australian Government is reducing red tape by $1 billion every year. Inclusion of the commitment in growth strategies This measure was included in the Brisbane Growth Strategy. Detailed implementation path and status Interim Steps (include deadlines) for Implementation In 2013, the Government set a target to reduce the net regulatory burden by $1 billion each year. The Government is commencing a program of systematically reviewing regulation with a focus on reforms that enhance innovation, competitiveness and productivity, in addition to the previous focus Page 17 Status As of December 2016, more than $5.8 billion of compliance costs on the community had been removed as a result of Government policies announced since September 2013.

19 on red tape (compliance cost) reduction. Updates on progress in regulatory reform and red tape reduction are released annually. Impact of Measure In just over three years, the Government has reduced the regulatory burden on business and the community by more than $5.8 billion. Reducing the regulatory burden for individuals, businesses and community organisations is expected to significantly boost productivity performance, thereby making Australian businesses more competitive. Boost public infrastructure investment through the Infrastructure Growth Package The Government committed $50 billion for transport infrastructure from to under its National Infrastructure Plan. The Government s commitment has been expanded in the Budget see Annex 3. Inclusion of the commitment in growth strategies This measure was included in the Brisbane Growth Strategy. Detailed implementation path and status Interim Steps (include deadlines) for Implementation Each major project has an individual delivery schedule. Status Each infrastructure project has its own construction and operational timelines. There are around 120 major projects underway across Australia. Impact of Measure The infrastructure funding from to includes funding under the Asset Recycling Initiative, which provides incentive payments to state governments that privatise government-owned assets and reinvest the proceeds in productivity enhancing public infrastructure. The Government is also providing up to $2 billion in alternative financing, through a concessional loan, to support the second stage of the WestConnex motorway project in Sydney, New South Wales. Page 18

20 Non-key Commitments The policy action The Higher Education Reform Package Status of Impact of the policy Implementation Brisbane Commitments In-progress In the Budget the Government announced it would not proceed with higher education reform measures from the Budget and announced a Higher Education Reform Package to improve sustainability and responsiveness for students. The Government will no longer deregulate student fees (this was announced in the Budget). The new higher education reform package increases student contributions to better reflect the lifetime benefits of higher education for graduates. Under the new package, universities will also play a larger part in building a more sustainable system alongside students and taxpayers. Student contributions will increase by 7.5 per cent, phased in over four years. Following this change, the Australian Government will pay 54 per cent, on average, of a higher education student s fees, with the other 46 per cent being the student s responsibility. Students will continue to have access to income contingent loans (HELP loans) to pay their fees but will start paying back the loans at lower incomes. An efficiency dividend of 2.5 per cent per annum in 2018 and 2019 will be applied to universities and will not be able to be passed on to students. The Government is creating new community-owned regional study hubs and expanding support for work experience units to increase accessibility for regional students. The Higher Education Reform Package will ensure the higher education system is more sustainable, is responsive to the aspirations of the students and the needs of the future workforce, and will increase transparency and accountability in higher education. Page 19

21 Annex 3. Major New Policy Actions Supporting Growth Hamburg Summit National Infrastructure Plan Building Australia The Government is committing over $70 billion from to for transport infrastructure across Australia. Objective(s) of policy Implementation path and expected date of The Australian Government is committing over $70 billion from to for transport infrastructure across Australia, using a combination of grant funding, loans and equity investments. It is also establishing a 10-year allocation for funding road and rail investments, recognising that many transformational projects are planned and built over many years. The Government is expanding the use of equity and debt financing where appropriate to augment its infrastructure spending. To assist in the identification, development and assessment of equity and debt financing options for investment in major infrastructure projects, the Government is establishing the Infrastructure and Project Financing Agency on 1 July The Government will begin construction in of a Melbourne to Brisbane Inland Rail freight line. The 1,700 kilometre Inland Rail project involves approximately 500 km of new track and approximately 1,200 km in upgraded existing rail track. It will be delivered by the government-owned below rail operator the Australian Rail Track Corporation through a combination of an additional $8.4 billion equity investment and a public private partnership for the most complex elements of the project. The Government is building a second airport on the western edge of Australia s largest city, Sydney. It will be constructed and operated by a new Australian government-owned company (WSA Co.) in which the Government will make an equity investment of up to $5.3 billion. Works on the Western Sydney Airport will commence by late 2018, with operations beginning by The Government is establishing a $10 billion National Rail Program to fund priority regional and urban rail investments, with funding to be provided over 10 years. In addition, funding of $20 million is available for development of up to three business cases for projects to deliver faster rail connections between major cities and major regional centres. This measure supports Resilience principle P2 and is consistent with the Enhanced Structural Reform Agenda (ESRA) principle: Improving infrastructure. The National infrastructure Plan contains a large number of individual projects to be delivered by the Australian and State and Page 20

22 implementation What indicator(s) will be used to measure progress? Explanation of additionality or adjustment (where relevant) Territory governments with varying construction timetables. Detailed information on each measure is available at: Individual infrastructure projects are subject to planning and delivery timetables determined by the sponsoring government. Well-selected infrastructure investment improves long-run productivity, increasing and spreading Australia s economic growth and delivering higher incomes for Australians. Work on the Melbourne to Brisbane Inland Rail freight line will support 16,000 direct and indirect jobs at the peak of construction. The construction of the new Western Sydney Airport is expected to generate around 20,000 direct and indirect jobs in Western Sydney by the early 2030s. Quality Schools true needs-based funding for Australia s schools Objective(s) of policy The Government will provide an additional $23.4 billion in recurrent funding for schools for the period to 2027, to implement a new needs-based funding model for schools which delivers a consistent Commonwealth approach for all schools in all States and Territories. This measure will: transition schools recurrent funding for underfunded schools over 6 years and overfunded schools over 10 years from 2018 to a consistent Commonwealth share of the needs-based Schooling Resource Standard (SRS) of 20 per cent for government schools and 80 per cent for non-government schools. The SRS comprises a base amount for every primary school student ($10,953 in 2018) and secondary school student ($13,764 in 2018), plus loadings for students and schools who need extra support; transition the loading for students with disability to be based on the Nationally Consistent Collection of Data on School Students with Disability and scaled for level of classroom adjustment required; provide additional transition assistance for disadvantaged and vulnerable schools whose funding is already above the Commonwealth share of the SRS in 2027; provide additional support for government schools in the Page 21

23 Northern Territory; deliver on the Budget commitment to index the base SRS amount by a fixed rate of 3.56 per cent for the 2018, 2019 and 2020 schools years, and from the 2021 school year, index the base SRS amount (with a floor of 3.0 percent) by a program-specific parameter calculated as a composite of the Wage Price Index and Consumer Price Index to better reflect growth in costs; and provide ongoing funding of $51.6 million over four years from to ensure the Commonwealth s approach to capital funding for non-government schools is consistent with that for government schools. establish a new National Resourcing Board to undertake independent review of elements of the school funding model and assess compliance of approved authorities with the requirements of the Act. This measure will also provide additional funding to support national reforms in the schools sector, and the implementation of school funding arrangements. This measure supports Resilience principle P1 and is consistent with the ESRA principles: Advancing labour market reforms, educational attainment and skills, and promoting inclusive growth. Moving to a needs-based funding model should provide more assistance to vulnerable and disadvantaged schools, and thereby improve overall education outcomes in Australia. Implementation path and expected date of implementation What indicator(s) will be used to measure progress? Explanation of additionality or adjustment (where relevant) Legislation to amend the Australian Education Act 2013 will need to be passed by late 2017 in order for the proposed arrangements to commence in the 2018 school year. Commonwealth funding will be tied to the reform and accountability efforts made across both the government and non-government sectors to improve educational outcomes. Reform priorities will be informed by the independent Review to Achieve Educational Excellence in Australian Schools. The new needs-based funding model provides schools with certainty around long-term funding arrangements. These funding arrangements are an investment in Australia s economy and ensure quality education for the future labour force. Page 22

24 Skilling Australians Fund Objective(s) of policy Implementation path and expected date of implementation What indicator(s) will be used to measure progress? Explanation of additionality or adjustment (where relevant) The Government will provide $1.5 billion over four years from to establish a permanent Skilling Australians Fund (the Fund) to support the skilling of Australian workers. The Fund will be prioritised towards apprenticeships and traineeships. When matched with funding from the States and Territories, it will support up to 300,000 apprentices, trainees, pre-apprentices and higher level skilled Australians over the next four years. Priority will be given to occupations in high demand with a reliance on skilled migration pathways, industries and sectors of future growth, trade apprenticeships, and regional and rural areas. Projects may include providing incentives for employers, preapprenticeship training, improving apprenticeship and traineeship retention and completion rates, and additional support for higher level apprenticeships. This measure supports Resilience principle P1 and is consistent with the ESRA principles: advancing labour market reforms, educational attainment and skills, and promoting inclusive growth. Implementation details regarding access to the Fund and expected outcomes will be agreed between the Commonwealth and the States and Territories. Funding will be available from The Fund is ongoing. Access to the Fund will be subject to clear eligibility, outcome and reporting criteria. Details will be agreed between the Commonwealth and the States and Territories. A focus on apprenticeships and traineeships will support more Australians to get the skills they need for jobs in demand, boosting productivity and growth. Regional infrastructure Objective(s) of policy The Government is investing $770 million in modern infrastructure in Australia s regional areas. The Government is committed to ensuring that Australia s regional areas grow and prosper with economic growth occurring broadly across the country. The Regional Growth Fund (RGF) will invest $472 million in regional infrastructure projects to help these regions adapt to and harness the opportunities of globalisation and technological change. The RGF will include $272 million to provide grants of $10 million or more for major transformational projects which support long term economic growth and create jobs in regions, including those Page 23

25 undergoing structural adjustment. In addition, a further $200 million will be provided to the Building Better Regions Fund (BBRF) to support the construction of community infrastructure and build the capacity of regional areas. This investment increases the Government s total commitment to the BBRF to $498 million. This measure is consistent with ESRA principles: Improving infrastructure and promoting inclusive growth. Implementation path and expected date of implementation What indicator(s) will be used to measure progress? Explanation of additionality or adjustment (where relevant) The Government will provide $472.2 million over four years from to establish the Regional Growth Fund which includes $200 million for the second round of the BBRF. The first round of the BBRF will provide $297.7 million over three years from Funding for the BBRF will be allocated on a competitive basis through two funding streams: infrastructure projects and community investments. N/A Investment in infrastructure is key to unlocking the potential of Australia s regions. The RGF s major transformational projects support long-term economic growth and create jobs in regional areas. Regional Jobs and Investment Package The Government is working to further support jobs and growth in regional areas Objective(s) of policy Ten pilot regions have been chosen to be a part of the Regional Jobs and Investment Package (RJIP). These regions have untapped potential which, if unlocked, could lead to new sources of growth, economic diversity and the opportunity to pursue export markets. The RJIP aims to support these regions to meet the opportunities that will help to secure their economic future. The program provides funding in three grant funding streams: Local infrastructure These grants are for local governing bodies and not-for-profit organisations to invest in new or upgraded infrastructure. Business innovation These grants will enable business to Page 24

26 build scale and capability to be competitive in new or growing markets that create sustainable employment. Skills and training These grants will provide funding to local government bodies and agencies and not for profit organisations. These projects will support training and upskilling of the regional workforce to meet regional priorities, take advantage of emerging opportunities and withstand major labour market changes. More information of on the RJIP is available at: This measure supports Resilience principle P2 and is consistent with the ESRA principle: Improving infrastructure. Implementation path and expected date of implementation What indicator(s) will be used to measure progress? Explanation of additionality or adjustment (where relevant) The Government will provide $220 million over four years from for the Regional Jobs and Investment Package. N/A This package will support regional communities to diversify their economies, stimulate long-term growth and deliver sustainable employment. Housing affordability The Government is committed to reducing pressure on housing affordability. The Government is ensuring that Australians have better access to secure and affordable housing. The Government will: Objective(s) of policy assist first home buyers to build a deposit inside superannuation. Voluntary contributions of up to $15,000 per year and $30,000 in total will attract concessional tax treatment under the scheme. The scheme commenced on 1 July 2017, and contributions and deemed earnings, net of tax, can be withdrawn from 1 July 2018; allow older Australians to contribute downsizing proceeds into superannuation. From 1 July 2018, individuals aged 65 and older will be able to make a non-concessional contribution of Page 25

27 up to $300,000 using proceeds from the sale of a principal residence held for at least 10 years into their superannuation. These downsizing contributions will not be subject to the existing contribution caps. This will help free up larger homes for families; work with the States and Territories to reform Commonwealth funding arrangements under a new National Housing and Homelessness Agreement, retaining current funding and indexation arrangements but requiring concrete outcomes; provide additional funding of $375 million over three years from as part of a new National Housing and Homelessness Agreement to fund front line services to address homelessness; incentivise increased private investment in affordable housing through tax incentives and by establishing the National Housing Finance and Investment Corporation to operate an affordable housing bond aggregator to provide cheaper and longer-term finance for the community housing sector; and provide more security for renters by working with the States and Territories to standardise the use of long-term leases. Recognising that the key to easing housing affordability is building more homes, the Government will boost the supply of housing by: working with the States and Territories to set housing supply targets and facilitate planning and zoning reform under the new National Housing and Homelessness Agreement; establishing a $1 billion National Housing Infrastructure Facility that will provide financial assistance to local governments to support a range of options to finance critical infrastructure such as transport links, power and water infrastructure and site remediation works; establishing an open data Commonwealth land registry that will provide more detailed information about Commonwealth land to external parties, allowing and encouraging proposals for higher-value land use, including housing development proposals; releasing suitable surplus Commonwealth land including 127 Page 26